Michael Dell started his company with a purpose. His purpose was to sell directly to the end user by eliminating the intermediaries. Dell’s company, PCs Ltd., was able to sell IBM clones for 40% less than the competition. This strategy resulted in instant growth for his company.

The fast growth of his company gave Dell his share of early development problems. He needed to increase his production capacity, add additional staff, and create a business model to follow. Dell needed to do this and keep his growing costs low. He renamed the company Dell, added a sales force, and offered common stock. The sales team was able to sign contracts with large customers. His sales rose to $388 million in 1990.

Dell wanted his direct sales to increase even faster than they had been so he decided to distribute his products at warehouse stores. He realized he had made a huge mistake after they saw how small the sales margins were. He withdrew from the retailers after only three years. Dell realized that direct sales were the only market he wanted to be in.

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